SGI: Still Hanging Tough
By Chris Preimesberger
November 8, 2005
MOUNTAIN VIEW, Calif.—Monday was the first day since 1986 that the stock of Silicon Graphics Inc., better known as SGI, has not been traded on the New York Stock Exchange. Its recent delisting is just the latest chapter of a long, painful story that analysts say is loaded with lessons for other companies.
However, company executives say SGI's customer base remains loyal and its technology base is strong enough to sustain it, albeit in narrow vertical markets.
SGI's stock, which closed Friday at 46 cents per share, had been selling for under $1 since last May, when the exchange notified the company that its common stock had fallen below the minimum share price standard for continued listing. The NYSE's standard requires that a company's common stock trade at a minimum average closing share price of $1 during a consecutive 30-day trading period.
SGI is now being traded on the small-cap Over the Counter (OTC) Bulletin Board.
"While SGI has been listed on the NYSE, a significant amount of our trading volume is currently executed off the NYSE. We believe there will be a seamless transition to OTC, and this change does not affect our operations. The bottom line is that we remain focused on our customers and business objectives," offered SGI spokeswoman Caroline Japic.
"At the beginning of the fiscal year, we outlined three primary objectives: refinancing for improved liquidity, significant cost reductions, and revenue generation plans. As we announced last week, we are on track with the milestones we set for ourselves in these areas, although our plans will take several quarters to be fully implemented. Specifically, we met our revenue targets for the September quarter, initiated our restructuring and cost savings plans, and on Oct. 25 announced that we had completed a new asset-based credit facility, which significantly improves our liquidity," Japic continued.
Still, SGI lost $19 million last quarter and expects to lose somewhat less this quarter. This is a company that earned $730 million in 2004 and made more than $3 billion in 1997, its peak year.
What happened? Progress, according to some....
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